Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
The lower the equidity of a stock, the narrower its bid-ask spread
(T/F)
Expert Solution
Bid/Ask Spread:
The bid/ask spread is a type of trading cost that the investors incur while trading through a market maker. The bid price is the highest price a buyer is willing to pay for a security and the ask price is the lowest price a seller is willing to accept for a security for trading in the secondary market. The bid/ask spread is the difference between the ask price and bid price.
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